Wednesday, July 05, 2006

ATLANTA - Three people have been arrested and charged with stealing confidential information about drink recipes from The Coca-Cola Co. and trying to sell it to rival PepsiCo Inc., federal prosecutors said Wednesday.

The suspects include an executive administrative assistant at Atlanta-based Coke, Joya Williams, who is accused of rifling through corporate files and stuffing documents and a new Coca-Cola product into a personal bag.

Williams, 41, of Norcross, Ga., and 30-year-old Ibrahim Dimson of New York and 43-year-old Edmund Duhaney of Decatur, Ga., are charged with wire fraud and unlawfully stealing and selling Coke trade secrets, federal prosecutors said.

They are expected to appear before a federal magistrate judge on Thursday in Atlanta.

Pepsi spokesman Dave DeCecco said his company did what any responsible company would do in cooperating with Coke and the investigation.

"Competition can sometimes be fierce, but also must be fair and legal," DeCecco said. "We're pleased the authorities and the FBI have identified the people responsible for this."

Coke's chief executive, Neville Isdell, said in a memo to employees Wednesday that the company is cooperating with federal authorities.

"Sadly, today's arrests include an individual within our company," Isdell wrote. "While this breach of trust is difficult for all of us to accept, it underscores the responsibility we each have to be vigilant in protecting our trade secrets. Information is the lifeblood of the company."

He said Coke will review its information protection policies, procedures and practices to make sure it safeguards intellectual property.

According to prosecutors, on May 19, Purchase, N.Y.-based PepsiCo provided Coke with a copy of a letter mailed to PepsiCo in an official Coca-Cola business envelope. The letter, postmarked from the Bronx in New York, was from an individual identifying himself as "Dirk," who claimed to be employed at a high level with Coca-Cola and offered "very detailed and confidential information." "Dirk" was later identified as Dimson, the FBI says.

Prosecutors say Williams was the source of the information Dimson offered to provided Pepsi. They say that "Dirk" provided an FBI undercover agent 14 pages of Coca-Cola documents marked classified and confidential. The company confirmed that the documents were valid and highly confidential and were considered trade secrets. Williams works for a senior Coke manager, though the company would not say Wednesday which one. The company also would not say if she has been fired.

Prosecutors say "Dirk" requested $10,000 for the documents.

Later "Dirk" produced other documents that Coca-Cola confirmed were valid trade secrets of Coca-Cola and highly confidential. He also agreed to be paid $75,000 for the purchase of a highly confidential product sample from a new Coca Cola project, prosecutors said.

Then on June 27, an undercover FBI agent offered to buy other trade secret items for $1.5 million from "Dirk." The same day a bank account was opened under the names of Duhaney and Dimson, and the address used on the account was that of Duhaney's Decatur residence, prosecutors said.

Video surveillance showed Williams at her desk at Coke headquarters going through multiple files looking for documents and stuffing them into bags. She also was observed holding a liquid container with a white label, which resembled the description of new Coca-Cola product sample before placing it into her personal bag, prosecutors say, adding that Coca-Cola later verified the sample was genuine and is in fact a product being developed by the company.

Dimson, Williams and Duhaney were arrested in Atlanta on Wednesday, the day the $1.5 million deal was to take place, prosecutors say.

HOUSTON - Enron Corp. founder Kenneth Lay, who faced decades in prison for one of the most sprawling business frauds in U.S. history, died Wednesday while vacationing in Aspen, Colo. He was 64.

His pastor in Houston said Lay died of a heart attack, which had not yet been confirmed by an autopsy.

Lay ascended from near-poverty as a minister's son in Missouri to the pinnacle of corporate America. He was considered a visionary who had President Bush's ear during Enron's halcyon days, but his reputation and monumental wealth shattered with that of his company. He spent his last years optimistically insisting he was no criminal, even after he became a felon.

"I guess when you're facing the rest of your life in jail and in your heart you know you're an innocent man, I guess it's too much to bear," said close friend Willie Alexander.

Lay had stayed out of the public eye since a federal jury on May 25 convicted him and former Enron CEO Jeffrey Skilling of fraud and conspiracy for lying to employees and investors about Enron's financial health.

Lay, who described himself as naturally optimistic, displayed no signs of ill health throughout the grueling four-month trial that started Jan. 30. His lead lawyer, Michael Ramsey, was sidelined for several weeks during the trial because of heart problems.

"It's a very sad ending for the whole Lay family saga. There are very few people of his age and abilities who flew as high or who fell so low," said John Olson, an analyst who angered Lay with his skeptical takes on Enron's often indecipherable financial reports.

Along with fraud and conspiracy charges, Lay also was convicted in a separate federal trial of bank fraud and making false statements to banks. Those charges related to his personal finances.

Lay was scheduled to be sentenced Oct. 23, along with Skilling, who also faces a long prison term.

Skilling, reached by telephone at his home in Houston, told The Associated Press that he was aware of Lay's death.

"No, I don't have any comment," he said quietly. But his lawyer, Daniel Petrocelli, described Skilling as "devastated."

"Jeff and Ken worked closely over the years, and Jeff will miss him dearly," Petrocelli said.

Lay led Enron's meteoric rise from a staid natural gas pipeline company formed by a 1985 merger to an energy and trading conglomerate that reached No. 7 on the Fortune 500 in 2000 and claimed $101 billion in annual revenues. Lay traveled in the highest business and political circles, lived an extravagant lifestyle and gave generously — as much as $6.1 million in 2001.

Lay's clout evaporated when Enron spiraled into bankruptcy protection in December 2001. The crash obliterated Enron's more than $60 billion in market value and thousands of jobs, and Lay was pushed out as chairman and CEO in January 2002.

The government launched a widespread fraud investigation that enveloped Enron's finance, trading, broadband and retail energy units. The probe amassed 16 guilty pleas from ex-executives, eight of whom testified against Skilling and Lay during their trial.

Lay and Skilling insisted no fraud occurred at Enron except from a few employees who skimmed money behind their backs. Jurors were unconvinced.

"I loved Enron very much. And I loved Enron's employees very much. I spent half my professional life running Enron. I think we built a great company. We changed energy markets around the world," Lay testified during the trial.

Prosecutors in Lay's trial declined comment Wednesday, both on his death and what may become of their effort to seek $43.5 million from Lay that they say he pocketed as part of the conspiracy. The government is seeking $139.3 million from Skilling.

Lay's death will not affect the government's case against Skilling, who will appeal his convictions, Petrocelli said.

The Pitkin, Colo., Sheriff's Department said officers were called to Lay's house in Old Snowmass, Colo., shortly after 1 a.m. MDT (3 a.m. EDT). He was taken to Aspen Valley Hospital, where he died at 3:11 a.m., said Pat Worcester, executive assistant to the Aspen hospital's chief executive.

Lay's bond allowed him to travel only to Colorado and in the Houston area.

Pastor Steve Wende of Houston's First United Methodist Church, said Lay died of a heart attack.

"Apparently, his heart simply gave out," Wende said.

Wende said Lay seemed healthy when he attended services in Houston on Sunday, and even believed God may have had a purpose for him in prison.

"He was very much at peace with his future, he had a perspective on what had happened, he even bore no ill will for the jury or all of the people who might want to say terrible things about him," Wende said.

Before Enron became a scandal-tainted punchline, the company was the single largest contributor to President Bush, who nicknamed Lay "Kenny Boy." Lay said he was closer to the president's father, George H.W. Bush. He kept a framed photo of himself with a smiling elder Bush and former First Lady Barbara Bush.

But White House press secretary Tony Snow said Wednesday he hadn't discussed Lay's death with the president.

"The president has described Ken Lay as an acquaintance. And many of the president's acquaintances have passed on during his time in office," Snow said.

During the trial Lay had been expected to charm jurors, but instead came across as irritable and combative.

Lay defended his personal spending, including a $200,000 yacht for Linda Lay's birthday party in early 2001, despite $100 million in personal debt. He told jurors it was "difficult to turn off that lifestyle like a spigot."

Lay also defended how he borrowed more than $70 million from Enron in 2001 — even as the company was spiraling — and repaid most of those loans with company stock.

"I wanted very badly to believe what they were saying," juror Wendy Vaughan said after the verdicts were announced. "There were places in the testimony I felt their character was questionable."

Lay was born in Tyrone, Mo. and spent his childhood helping his family make ends meet. His father ran a general store and sold stoves until he became a minister, and Lay delivered newspapers and mowed lawns. He attended the University of Missouri, found his calling in economics, and went to work at Exxon Mobil Corp.'s predecessor, Humble Oil & Refining.

He joined the Navy, served his time at the Pentagon, and then served as undersecretary for the Department of the Interior before he returned to business. He became an executive at Florida Gas, then Transco Energy in Houston, and later became CEO of Houston Natural Gas. In 1985, HNG merged with InterNorth in Omaha, Neb. to form Enron, and Lay became chairman and CEO of the combined company the next year.

Lay is survived by his wife, five children and stepchildren and 12 grandchildren.

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Associated Press Writers Kim Nguyen in Denver, David Koenig in Dallas and Rich Matthews in Houston contributed to this report.